The state and we the ‘consumers’ are both keeping the economy afloat by going further into debt. It’s suicidal.
Flashback: US credit shrinks at Great Depression rate prompting fears of double-dip recession | Canada’s $1-trillion debt baby | Credit delinquencies up 24% in June | Bank of Canada declares recession over | Budget officer ‘can’t tell’ if stimulus plan working | More Canadians in arrears on credit payments | Canadian households $1.3-trillion in debt | Credit card changes benefit families, Flaherty says | Credit companies seek to avoid regulation, create global debit system | Canadian credit card delinquencies rising | All maxed out? Budget measures would improve credit access | Now the consumer crunch: falling credit limits, rising interest rates | Bank of Canada adds $8B to credit markets | $25B credit backstop for banks ‘not a bailout’: Harper
Tavia Grant, The Globe and Mail
September 24, 2009
Canadians continued to pile up credit card debt in the second quarter of this year in lockstep with rising joblessness and personal bankruptcies.
The country’s charge-off rate — a measure of credit default — hit a record 4.8 per cent in the quarter, said Moody’s Investors Service in its latest credit card indices report for Canada. It expects charge-offs will worsen further in the coming months, though the rate of deterioration should ease.
At 4.8 per cent in the quarter, the Canadian charge-off rate index is up almost 60 per cent from a year earlier. It’s the tenth straight quarter of year-over-year increases for the index.
“The intensity of the current recession has led to charge-offs that have exceeded previous cyclical highs by a relatively wide margin,” says Moody’s senior analyst Sumant Inamdar.
Debt levels are nowhere near those of the United States or Britain though. Canadians’ delinquency rate, which tracks account balances where payment is more than 30 days overdue, was 2.82 per cent in the second quarter, up from 2.29 per cent a year earlier but better than the 2.90 per cent in the first quarter.
By contrast, U.S. and U.K. delinquency rates are more than twice as high as those in Canada, the report said.
Credit card charge-offs are closely correlated with the unemployment rate, which hit 8.7 per cent in August. [Ed. Note: And it's higher than that, since (laughably) one has to be on unemployment to be considered unemployed. EI ran out? You're no longer even a statistic.]
The rating agency expects the jobless rate to peak at about 9.6 per cent in the second quarter of next year — which is also when charge-offs should peak.
Charge-offs are defined as lenders’ losses from outstanding balances they’ve had to write off.
Canada’s big banks also see a recovery in the credit-card market next year. Losses in the credit card industry should start to ease in the coming months and growth will return next year as the economy improves, the chief executive of Canadian Imperial Bank of Commerce said earlier this week.
Source | See also under Money: IMF approves $13bn gold sale to boost lending fund | US credit shrinks at Great Depression rate prompting fears of double-dip recession | Canada’s $1-trillion debt baby | Gold regains $1,000 | UN wants new global currency to replace dollar | Gold toys with $1000/oz | China Set to Buy $50 Billion in IMF Notes | Investors dump money market funds | More US Bank Failures and The Coming Deposit Insurance Bailout | Industrial demand for silver sharpens bullish view | Underwhelming GDP growth fails to move stocks, loonie | Ottawa plans U.S. dollar bond | A Stock Market Rally Engineered by Government | Central bank of Canada stands ready to inflate currency in response to strong loonie | Credit delinquencies up 24% in June | Derivatives rear their ugly head again: Leveraged ETFs outed | Former NY governor Spitzer: Federal Reserve is ‘a Ponzi scheme, an inside job’ | Global demand for gold investment soars 38% in past year | Cost Of US Bailout Hits A Whopping $24 Trillion Dollars | Timothy Geithner: travelling bond salesman | Record quarterly profits and bonuses: Goldman Sachs makes out like a bandit on taxpayer’s dime | Fed ‘Independence’ or Fed Secrecy? | Medvedev Unveils “World Currency” Coin At G8 | More Canadians in arrears on credit payments | The search for the mint’s missing gold | China calls anew for super-sovereign currency | Central banks to take off ‘training wheels’ | Congressman Ron Paul Slams Federal Reserve’s New Dictatorial Powers | Central Bank of Canada ‘considering’ regulatory changes, ‘continuous private liquidity creation’ | The next cellphone trick: transferring money | Royal Canadian Mint’s ‘lost’ gold worth a mint | Bullion and Bandits: The Improbable Rise and Fall of E-Gold | No one talking about dumping dollar: China minister | China explores buying $50bn in IMF bonds | Has the Mint’s gold vanished? | Chinese economists deem huge holding of US bonds “risky” as Geithner visits | Soaring loonie adds to anxiety over economy | Economist Warns Fed Will Bring About Zimbabwe Style Hyperinflation | Federal deficit to top $50B | Canadian households $1.3-trillion in debt | Digital Money Forum Pushes For Electronic Currency | Obama signs U.S. credit card reforms into law | Credit card changes benefit families, Flaherty says | Quebec pension fund managers boosted derivatives holdings despite warnings | Leaked 1955 Bilderberg Docs Outline Plan For Single European Currency | Banker at heart of credit crisis leads plan to buoy auto sales | Bank of Canada poised to print money to buy bonds | Credit companies seek to avoid regulation, create global debit system | Congressman: Reckless Spending And Taxation Prolonged Great Depression | Barclays, Lloyd’s, RBS join Goldman-Sachs in the black | Goldman-Sachs to repay TARP loan, resume private operations, bonuses, at “earliest time” possible | Bilderberg chairman: ‘Bilderberg helped create the Euro’ | Financial Rescue Nears US GDP as Pledges Top $12.8 Trillion | US backing for world currency stuns markets | UN & IMF Back Agenda For Global Financial Dictatorship | Geithner Plan Will Rob US Taxpayers: Stiglitz | US unveils P3 plan to monetize debt, nationalize banks | Bank crisis spawns new kind of gold rush | Wall Street’s Big Takeover |Financial Post editor: America’s future at risk of ‘inflationary outburst’ | U.N. panel says world should ditch dollar | IMF poised to print billions of dollars in ‘global quantitative easing’ | G20 officials pledge ‘whatever action necessary’ to revive economy | Mainstream Financial Publication Finally Admits that Austrian Economists Were Right | UK Central Bank begins using ‘new’ money | Central bank tactics pushed to brink | IMF emergency fund is doubled to $500bn, Northern Rock bank granted $14bn bailout | EU backs sweeping new financial rules, more power for IMF | Gold Tops $1,000, First Time Since March as Recession Deepens | Zimbabwe drops state currency monopoly, pegs prices to US dollars | How realistic is a North American currency? | All maxed out? 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